On Goal Setting: OKRs and KPIs
- Eric Andrade
- Feb 20, 2020
- 2 min read
It's that time of the financial year, if you follow the April to March FY cycle, when employees in most organisations are going full steam on setting their goals for the next FY.
Most often, the goal setting is a top-down approach, wherein the organisation as a whole has a big number in mind, and the rest of the organisation aligns itself to achieve this number.
And for measuring where things stand on this framework, each Employee's performance is measured using certain Key Performance Indicators (KPIs). Thus, KPIs are measurements within an existing framework. There is next to zero incorporation of any new strategic inputs in the course of the FY.
Compare the above KPI based framework to the goal setting method used by the likes of Google, LinkedIn, Spotify, Twitter. They use the Objective and Key Results (OKRs) approach to goal setting.
OKRs are simple. As John Doerr puts it in his goal formula;
"I will <objective> and be measured by <2-5 key results>"
Here 'Objectives' need to be simple, short and easy to remember. They could be informal and fun too.
The 'Key Results' should only be 2 to 5 per objective -- and should not be confused with initiatives -- these are measurable metrics!
Unlike KPIs, OKRs are not measurement within a framework, rather, these are strategic frameworks in themselves, which can have different cadences (weekly, quarterly, yearly, you define it, etc).
This also implies that OKRs should not be used to evaluate bonuses, promotions or compensation. OKRs are strictly a management tool and not an employee performance evaluation tool.
Thus, OKRs are agile, and an effective way to aim for achieving goals which are a stretch to achieve. Any organisation planning to become more responsive to market changes should consider OKRs.
20 February, 2020
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